1. UNIVERSITY OF CAMBRIDGE INTERNATIONAL EXAMINATIONS
General Certificate of Education
Advanced Subsidiary Level and Advanced Level
BUSINESS STUDIES 9707/01
Paper 1 Short Answer and Essay
October/November 2006
1 hour 15 minutes
Additional Materials: Answer Booklet/Paper
READ THESE INSTRUCTIONS FIRST
If you have been given an Answer Booklet, follow the instructions on the front cover of the Booklet.
Write your Centre number, candidate number and name on all the work you hand in.
Write in dark blue or black pen.
Do not use staples, paper clips, highlighters, glue or correction fluid.
Section A
Answer all questions.
Section B
Answer one question.
You are advised to spend no more than 35 minutes on Section A.
At the end of the examination, fasten all your work securely together.
The number of marks is given in brackets [ ] at the end of each question or part question.
This document consists of 2 printed pages.
SP (SJF3948) T10580/2
© UCLES 2006 [Turn over

2. 2
Section A (Short Answer)
Answer all questions.
1 (a) Distinguish between assets and liabilities in a balance sheet. [2]
(b) Briefly explain why businesses depreciate their fixed assets. [3]
2 (a) Define the term “product portfolio”. [2]
(b) Briefly explain the importance of the product life cycle in planning a product portfolio. [3]
3 Briefly discuss the importance of effective stock control for production managers. [5]
4 (a) Define the term “levels of hierarchy”. [2]
(b) Briefly explain the advantages of a matrix organisational structure. [3]
Section B (Essay)
Answer one question only.
5 (a) Explain the importance of a market-orientated approach for a business in the consumer
goods market. [8]
(b) Evaluate the pricing strategies a business might use when launching a new product. [12]
6 Discuss the advantages and disadvantages of delegation for an expanding business. [20]
7 (a) Explain the difference between batch and flow production methods. [8]
(b) Evaluate the usefulness to a business of the Payback and Average Rate of Return techniques
in deciding whether to invest in changing its production method from batch to flow. [12]
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© UCLES 2006 9707/01/O/N/06